The President has approved yesterday the merger of the Development Bank of the Philippines (DBP) and Land Bank of the Philippines, the country’s finance chief said.
In a message to reporters, Finance Secretary Benjamin Diokno said Land Bank will remain as the surviving entity following the merger.
The move will create a bigger and stronger bank to better serve the country’s development needs, with the combined branches of the two banks resulting in a wider network of its banking operations, Diokno added.
“The merged bank will become the largest bank in the Philippines in terms of assets and deposit size,” Diokno said.
The finance chief said the merger will eliminate redundancy and inefficiency in operations.
“Projected operating costs savings due to the merger could reach at least P5.3 billion per year, or more than P20 billion over the next four years. This is a conservative estimate,” he said, noting that the merger complements the strengths and addresses the weaknesses of the two banks.
“Both are well-performing. But we have to constantly seek better ways of doing things. The improved financial position will provide a bigger headroom for loans that can be utilized for development projects,” he said.
“The merger will help avoid the need for DBP to recapitalize — from P30 billion to P100 billion — and seek capital infusion from the national government,” he added.
Diokno also said the merged bank will be in the best position to serve as the sole authorized government depository bank for the entire Philippine government and its instrumentalities.
“Having a single bank remains the best practice in the region and simplified procedures with counter parties,” he added.
Meanwhile, Diokno said the merger is unrelated to the proposed Maharlika Investment Fund.
“There is absolutely no link between the merger… and the Maharlika Investment Fund. The late president (Benigno) Aquino (III) signed an executive order merging Land Bank and DBP during his term but was not implemented,” Diokno said.
